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You may want to take a look into nginx error log to find out if something is going wrong. Looking into system logs and status might be helpful too. Also, you may dig further into your grpc client to understand why it reports errors and what exactly these errors mean.

You may also want to define "too many" and elaborate on why you think that the performance you observe is low.

Note well that with HTTP/2 the keepalive_requests directive you've used in the configuration is ignored. Consider ​http2_max_requests instead.

Note well that worker_processes 56; might be too many unless you really have 56 or more CPUs dedicated to nginx processes and appropriate amount of memory. It is certainly much more than needed for proxying of 1000 requests per second, and more likely to cause problems if there are not enough resources than to do anything good. You may want to start with worker_processes 1; instead.